welcome to "squawk box." there are only five trading sessions left this month. september may historically be a rough one for stocks, but not this year. all the major indexes are now up more than 5% in the third quarter and they are on track for the best quarter in two years. since the beginning of june by the way the dow is up 1200 points. we'll talk more about the markets and ask how you should be positioning your portfolio. we have bob doll joining us in a few minutes. also south korea says that it will resume iranian crude imports after a two month gap. how one country can have a huge impact on the price of commodities. and there is another threat we're talking about this morning and that is the risk to our nation's financial system. iranian hackers have attacked the websites of bank of america, jpmorgan and citigroup during the last year. at 7:30, we'll talk cyber

security and ask michael fertik if our nation's banking system is at risk. we'll talk about the latest from the campaign trail plus he was a governor, a presidential candidate, a mitt romney surrogate and a "squawk box" guest. now he's the new head of the financial services round table. tim pawlenty will be joining us live at #:00 a.m. and the emmy awards, homeland winning for best raw made, modern family with best comedy. before we get to all of this, let's get you up to speed on all of the top stories. >> i was very happy about homeland last night. i know joe was i imagine, too, since we're both -- i think you're a homeland watcher, as well, right? >> no. i've seen the first couple of episodes. i don't -- no. >> jimmy kimmel did a nice job with it. let's get you caught up on the headlines. major supplier, foxconn,

suspended production at a factory in china after a brawl by as many as 2,000 employees at a dormitory injured 40 people. the cause of the fight is under investigation. the taiwanese owned company declining to say whether this particular factory is involved in iphone production. apple and foxconn have been working together to improve labor conditions and raise wages there. foxconn makes components also for dell and hewlett-packard. united healthcare group will be officially moving into the group of 30. kraft foods leaving the group. they're spinning off their north american grocery business. and a new survey out of business economists today says that it finds that 45% believe congress needs to reduce the pearl did testify s federal government needs to reduce the deficit. uncertainty about the fiscal cliff and thousand might be addressed is slowing the

economic recovery, joe. >> let's check on the markets this morning. money market managers participated in the move high forewhatever reason you want to attribute to. whether the anticipation of qe-3 or -- what else could it be. i don't know. but the market has been slowly melting up. they've got double digit gains. but if they get out now, they'll miss the 30% gain. >> i thought the article was arguing that they're not going to sit on the sidelines, they're going to sell. >> that was the lead story. second is free checking is not really free. so a little slow today.

but the futures are -- you don't have the morning times yet, do you? >> i don't. >> i have to show you something at the bottom and ask if it's a mistake. >> did you see this? >> what else do you have there. >> mother jones, atlantic. new huffington "post" on the ipad. >> so we are indicated down about 612 points. there's what's happening over in europe. that's probably a little bit of contagion that we're seeing here. asian markets are mixed. mostly down. oil is now at 91.

ten year between 1 1/2 and 2 for so long. and gold made a big run on the prospects of qe-3. euro below 1.30. >> let's get over to kelly evans. >> it really is about europe. even the u.s. futures are reflecting the risk off attitude that we're seeing. 9:1 on the stoxx 600. it has a lot to do with the the move lower after we get the ifo results. it's a quiet week. certainly we've seen the initial bout of euphoria and now a bit of give back. it also wasn't helped by the fact that ifo sentiment which is a key gauge of german business sentiment fell unexpectedly for the fifth straight month in a

row. you can see the reaction here. the ftse 100 is down 0.6%. we've also seen losses in the paris market, ibex 35 here in spain down 1.7%. it doesn't help by the way that we're getting this kind of receipt tore rim out of the german finance ministry after reports over the weekend that the esm could be leveraged up to 2 trillion euros to hundred support economies like spain and italy. now they're walking back the claims. saying the actual figure is still to be decided. explains why we're seeing a little momentum to the down side here. italy and spain seeing a little bit of a selloff. really getting back to the levels that were dominating

before. again a lot of the central bank action over the last couple weeks. ten year bund yields fall to go 1.56% despite an auction of 12 month bills. could get a better price on the secondary than the primary market. explains the weaker tone this morning, but i have to mention to joe, out of the uk this weekend at a party meeting for the liberal democrats, one proposal floated to potentially help the housing market is to let kids borrow from their parents' pensions in order to get a mortgage basically. and more crazy ideas circulating, i'd love to know what reaction there is to this one on that side of the pond. back to you guys.

>> that seems like a crazy idea. >> certainly a reason to be skeptical of taking an asset that supports ultimately the retirement of a couple people and perhaps money used to invest in the economy and instead shifting that to the next generation so that they can buy into asset prices. >> as some point, you have to let it ride it out and at that time pain at some point. rick santelli is right. >> did you just say rick santelli is right? he might want to payroll that. >> he is. rick is right. this is an example, a crazy idea like that, why we should just take the pain. >> that's the first time he's been right, you're saying that? i don't understand. >>. >> no, but maybe rick can add that to the wall. the becky support. >>he inspired the tea party.

here thing. read the push to let ryan be ryan. what does it say? read it out loud? >> yes, i read this article. >> what does that mean, though? >> the article is called -- this is the promotion. >> what does the last line mean? >> push to let ryan be ryan, some conservatives are second guessing how paul d. ryan is being put to use in the presidential campaign and another line here. and that is a mistake. >> you noticed that somewhat does that mean and another line here? i read it and it's like -- is that some kind of -- >> i thought it was going to be about the article itself. >> what does that mean, and another line here? >> it means that there was an

editor or somebody who was supposed to have written another line here. >> some conservatives are second guessing how paul ryan is being put to use in the presidential campaign. and another line here. >> can't think of anything else to put. >> it's a mistake. that's like a typo. >> sometimes i do the same thing. i put in tktktk so it catches my attention. >> it's about as reliable as the rest of the drivel in here. >> that's not -- >> yeah, it is. >> joining us is bob doll, senior adviser at black rock. and bob, good morning. >> hi, becky. >> let's talk about the markets. an end reless plug coming from fed. jim chanos says you don't get

the traditional signals you would be getting from the markets because it's all amassed by qe. >> qe certainly has goofed things up. the fed has -- until now in my judgments tried to put a floor in for down side deflation. now you have to wonder is the fed pushing the pedal to the medal given inflationary concerns. >> how are you supposed to figure out what you should be doing? normally you'll be looking at things, watching the economy and seeing what happens. but if you can't fight the fed, how does it factor into your thinking? >> i think inflation is farther down the line. you say i got it to be worried, economies are weak, deflationary forces haven't gone away, but i have a monetary policy party all

over the world and fighting that has been the wrong thing to do. in my judgment that will continue to be the case. as you just reported, we've had a wonderful third quarter. markets don't go in a straight line. at any point we could get consolidation sideways or a pull back, but it seems with that party continuing, stocks 12 months from now will have outperformed cash and treasuries again. >> you're mr. single digits for the year, bob. >> at the beginning of the year, we said double digit. >> but you like united healthcare. >> we finally have that. >> what about what we've heard from the transports recently. fedex and one of the railroads talking about how they're not seeing shipments that would indicate we'll see a great fourth quarter. >> i think that's consistent

with this muddle through economy grind equity market. there are still linders that aren't firing and of course those stocks have lagged. that whole index has lagged. so this is not -- back to joe's wanting 30%. all this stuff has to get in gear to get that kind of thing and i just think with deleveraging and deflationary forces, it won't be there. we're not on six or eight cylinders and we won'ting be b long as delernlgi indeleveragin place. >> and you heard about the article in the wall street journal will money managers are going to sell and not participate so they can lock in their double digit gains. is that a smart move? >> i think that you will miss the accelerator from central banks around the world if you

take that attitude. taking a little money off the table, hard to fight that. exit and entry points are all important. >> does that mean the market goes lower because there will be so much of a flight from the market? >> i think that's a minority. there's a ton of cash on the sidelines. people saying should i, should i, should i. some of that money will come in and chase stocks higher about so that my guess is the path of least resistance, we'll still be higher. >> bob, thank you vef. great very much. great to see you. coming up, the weather forecast plus some of the weekend top sports stories. among our headlines in the coming days, barry diller, jeb bush, neel kashkari, david cody. trs in charge of their own future. how they'll live tomorrow. for more than 116 years,

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. welcome back. u.s. equity futures down about 61 points. they were down 62 earlier. so we've come up a little bit. i'm for squawk sports. i saw lot of sports yesterday and even more on saturday. let's start with football. last night's game, ravens beat the patriots, 31-30 in a rematch of the afc title game.

emotional for baltimore. torrey smith showed up tired and drained after his younger brother died in a motorcycle accident. he opted to play and caught touchdown passes of 25 and 5 yards to help the ravens beat new england. in other games of note, vibings handed their 49ers their first defeat. 24-13.kings handed their 49ers their first defeat. 24-13. in baseball as beat the yankees. yankees kept their one game lead in the al east because baltimore lost in boston. and snedeker beat rory mcilroy. tiger kind of faded right at the beginning of yesterday's round. i was most surprised, i never

think we should say anything about rutgers really. but to beat arkansas. >> and now they're ranked 23rd. >> and i watched the notre dame game where this great hawaiian guy had some tragedy in the last couple weeks and he was unbelievable on the field. >> the sloppy win by the jets? that's as best you'll going to -- >> what i will say is having watched football over the weekend, these fill-in refs, come on. they made some terrible calls. i can notice it, that's really awful. >> i was complaining about sanchez throwing yesterday. >> people told me at this point in eli manning's career, that they have similar statistics. so i guess i'm still willing to -- >> i like him. i like tebow, too.

>> do you think tebow should start? >> no. >> you like rex ryan, too. the fat or the thin rex ryan? >> he looks good. >> i like the fat rex ryan. >> i like the knew one. >> al roker hasn't been the same. 150 pounds ago is when i thought -- >> you got on give him credit for it. >> but, i don't know, it's because they don't look -- >> i didn't realize it was the same guy first time i saw him. >> i like fat rex. >> let's get to today's national forecast. alex wallace joins us from the weather channel. i didn't bring my coat in and i regretted it this morning. >> you you see, you got to check with us before you head outdoors. no doubt about it, a cool start for parts of the northwest. midwest, as well. east coast generally going to

stay dry. back out in the portions of the intermountain west, a little bit of weather weather to contend with there. what do we expect for the day? temperatures should warm up in new york city to the 60s for this afternoon, so certainly a fall-like day there. then we head into atlanta and enjoying the southwest. there's your risk for storms in and around miami. the middle of the nation should be quiet for the day. we do warm it up as we head part south. mostly talking ninth across texas including dallas. sunshine expected there. then we head to the west and dry along the west coast. a warm one in sacramento, about 88 degrees. threat for rain will be back across the interior. so as we head into tonight, storm chances do start to increase in the middle of the nation. it will be with this system here trying on get itself organized. that will give to work its way to the north and east, so tuesday ohio valley seeing storms. and by the middle of the week, that will work in to the northeast. so hump day shower and storm chances increasing for us new york city and then back into st.

louis. high temperatures there should top out right around 80 degrees. things starting to warm up in parts of the south. this afternoon atlanta 70s. warmer air to the west will begin to work itd way in. so by the time we head mid week, the 70s will be gone. >> thanks for that. we'll talk a little bit about ceo pay. how important is to make the big bucks? according to a new study out of the university of delaware, not as important as you would think. joining us to you discuss it, one of the authors of the study. finance professor at the university of delaware and director of the center for corporate governance. charles, i read this in the "new york times" yesterday and was fast mated by the study because it really suggested for the first time perhaps that actually maybe there wasn't such a portability at the very senior levels.

>> no, that's what we discovered. typically the idea behind the peer group is that you could go somewhere else. but we discovered that frankly the skills are not that transferable. most ceos don't leave. and when they do, they it turn out to deliver quite disappointing results. >> so when we hear that boards of directors have to pay people because there's a free market and that they can get attracted to another job, is that that that job doesn't exist or when they get there, they fail? >> when they get there, their scales aren't transferable. a lot of skills are coadevelopet the company itself and when you move, they don't move with you. and if you don't move with you, you don't do as well. so the market is based on the false premises of transfers ability and it just doesn't exist. >> is this an issue of crony

capitalism or an issue of the fact that the market doesn't exist? meaning a ceo is getting job offers but perhaps they shouldn't be as opposed to this other argument. >> it's an example of the board that's dominated by a market and based on a false premise. the problem is the market is based on the assumption that the sky is red when in fact that it's blue. and the market's perception has to meet the reality of the lack of transfer ability. >> what is the mythical premium that shouldn't exist, how much do you think it represents in the market? >> i think the idea is certainly ceos have great talent. the problem is that they're basically home grown talents. and i think you have to design a pay structure based at the

company itself as opposed to what someone else is paying. there are situations where someone is brought into sell a compa company. and that is a skill and that is transferable. but that isn't the way the majority of companies operate. we're waiting as though people can move from company to company. >> but i think of a mark herd going from hp to oracle. that seems on have worked out. there are examples. >> and there are exam peples one extreme. but by and large the superstars typically move and become super duds. and those who stay tend to perform better. >> we have to run, but do you have any hope that you've put the study out that it either changes the discussion inside the board room? >> i think it will change the discussion in the board room and that's the key. if boards become more sensitive to this and design pay structures internally rather than exteschly, i think we've gun to figure out a solution to the whole issue. you can't have the two pay

scales trying to merge. >> professor, thank you so much for joining us this morning. coming up, a "squawk box" first. a sitting president on our set. the president of bulgaria will be joining us. it's a member of the european union. so we have plenty to talk about him. this country was built by working people.

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welcome back to "squawk box." i'm joe kernen along with becky quick and an trdrew ross sorkin. the president of bulgaria. a lot to discuss in a minute. but first this morning's top stories from andrew. >> i'll set the table with some top stories. okay. a major apple supplier -- it's 6:30? okay. about time. apple supplier foxconn suspended production at a factory in china today. that happened after a brawl by as many as 2,000 employees at a dormitory injured 40 people. cause of the fight is under investigation. the taiwanese owned company

declined to say whether this particular factory is involved in it iphone production. apple and foxconn have been working together to improve labor conditions and raise wages there. foxconn also makes com poe nechbts for dell and hewlett-packard. revenues slightly above consensus of leunnar. we have seen weakness in the futures. dow close to 60 points below fair value. s&p down, as well. also we've been taking a look at what's been happening in europe. markets there lower. ftse off by just over half a%. cac by more than 1.1% and the dax 0.6%. asia, markets also ending mixed. mostly down. hang seng by 40 points. no main losses. we did see kospi ending slightly higher. oil prices down another $1.38.

a lot of strange moves in crude oil over the last week or so. and some pretty surprising pull backs have come through. but again, $91.51 is where we stand. ten year yield at 1.72%. we do have some numbers coming up later this morning, confidence numbers that come algtz later on. and also the final read on gdp. take a look at the dollar right now, you'll see the dollar is at will point town against tdown a but up against the euro. euro below 1.30. and gold prices are down by about $19. 17.59 an ounce. you united nations is meet to go discuss the world's most pressing issues. joining us on set, rosen, president of the republic of bulgaria. hangs so much for joining us. >> thank you. >> we love to talk about the eu.

i saw some comments from the czech president and i'm one did dering bulgaria was able to float debt and lower interest rates. the destruction of europe's democracy, he just said this recently is in its final phase because of two faced politicians that have opened the door to an eu super state. do you find yourself looking -- are you on germany's side in trying to hold back on moving too closely together or do you think -- are you on the southern european side? >> i have a meeting today and i'll ask him will the direct question. but let's face the two sides of the question you said to me. the one is about the financial markets, yes, they trust bulgaria. why is that, because bulgaria pays -- is a country with extreme low debt. we just have 16% gdp.

it is just $5 billion. really nothing. on on the other side of the deficit, running surplus. but 0.7% minus at the end of the year. bulgaria jumps in this year by 12 places up in the world economic forum competition just based on its competitive advantages from 74 to 62. and the most important thing, we're growing. it's 1.3, 1.5 percent. next year we're planning 2%. bulgaria is an island of stable and if you're stable, you can grow and move. >> it just seems to me paradoxical that some of the countries that were more under the soviet influence have become more capital list tick and some of countries that -- are you

less socialistic than some -- >> do you know how much the bulgarian government takes out of the gdp? 36%. do you know how much that is in sfran france some 55%. we believe the private sector by it definition is more effective than the public one before because of that, we leave the money to the private sector. just 36%. bulgarian budget out of the gdp. >> i know other presidents that -- i don't hear that same rhetoric from other presidents. >> the country's in central and eastern europe prove that they can -- look at the situation now. in bulgaria, we have pension reform, educational reform and many other reforms. so if you are capable of taking tough decisions and you can prove that you can perform, well, markets will trust you and investors will do the same. >> mr. president, up until about

a year ago or maybe less, you were planning on joining the euro. could you see a point in the future at which you would still want to adopt the euro? >> on the long future, definitely yes. bulgaria will be waiting to see how the whole story will be developing. let me give an example. tax rate in bulgaria is 234r59 ra flat rate 10% on personal and corporate level. by reducing the taxes, we have improved and increased the income of the state. so by doing so, bulgaria is a good example that you can be effective. >> doesn't sound fair, does it, andrew? does sound fair to you, 10%? >> the 10% tax was introduced a couple years ago and we are very

stable. >> the question would be what's the income distribution look like in your country. >> income distribution today we started an interesting discussion in bulgaria about a salary improvements and pension improvements. and as a president, do you know with a was the question i was asked at the parliament some fine, we will increase our pensions. where is the money going to come from? are we going to really get the money out of credit and increasing can debt as bulgaria was not an example of quick, cheap, easy increase of salaries on a depth base. we are an example of a country which which is ready to work out its salaries. there is plenty to be done. but we redistribute what we produce and not what we wish. >> what about unemployment. it's a problem that has plagued

a lot of european nations. >> you're right. unemployment before the crisis was a about below 8%. now it's about 11%. butlowest, but not the highest. it's more average. >> it's gone up during the period of the crisis. where do you see a year or two from now? >> well, the unemployment will definitely get a trend to be to reach 9%. we start some programs especially in the youth unemployment. we do have a program offering 19,000 working places until the end of the year. of course bulgaria in the past was also an education center. and during the soviet communist time, bulgaria was the silicon valley of the soviet bloc. and even now we have a vibrant i. ti includ i.t. cluster and we're are

targeting special programs with america and israel with the european upto position bulgaria -- >> are you in favor of a much closer union with the rest of europe even if it means that countries have want been as fiscally responsible as you, that they're going to benefit? should there be a fiscal union, do you want to move quickly towards that? >> i am pro european president. and we believe that the next phase of integration in you're of that going to come. what i would like to see more in europe is that politicians taking -- it took four years since the collapse of lehman brothers and we are thinking about this and the other one. and if you want the investors and world to trust you, you need to trust yourselves first. you have a plan. you're moving in the right direction. so this is all about europe having a plan, sticking to it. it is going to be financial

union, fine. political union, fine. banking union. but please develop and move. bring results. >> you're going to share the problems of countries that are not quite as private sector oriented as you are. >> you're right. >> you'll take on portugal and spain and italy and france. you'll take all those problems. your people, which are finally getting to the point where they'll be able to enjoy some of the prosperity from your efforts you're willing to -- >> you're right, but let me tell you something. europe even now, it's in some troubles. europe has a bright future and everyone should work for this. a more integrated europe, world economic power. >> some of the same market reforms that you've already affected. effected. >> they're aware that competitiveness is an important

tool. >> perception of corruption. european commission comes out with a -- recently came out with a new study. bulgaria is on the list. how do you change the perception in terms of the corruption issue among the business community, among the political community? >> 3 1/2 years ago, bulgaria hit some difficulties with the the european structure. they had been stopped for some of the big infrastructure all projec projects. now bulgaria only one of the three european countries which performs great and has no structure stopped. how this change happen? well, there was a very bold decision by the government to employ young people. now we have ministers, experts, 33 years old, 35 years old, as managers. they just focus on improving transparency and what we're doing on big infrastructure projects. and actually today the error

rate of bulgaria running european structural funds fell dramatically down from 15% down to one of the best in europe. change is possible within 3 flf years and bulgaria is a good example of this. >> very good. president, thank you. >> i thank you, too. >> between luck at the united nations and all the meetings this week. >> thank you very much for inviting me. >> comments, questions about anything you see here, e-mail us at squawk@cnbc.com. coming up, why a new study says that breathing in european air could shorten your life. we'll also talk about the debate over taxes, job and other issues lighting up the campaign trail.

today a look a u.s. equity futures. you'll see red arrows. dow would open down 60 points. nasdaq also off as would the s&p 500. major european markets, we can quickly flip that chart around there. you've also got red arrows pretty much across the board. cac and foot citse looking down. a new report warns breathing european air shortens lives. microscopic particles are still found at dangerous levels in europe. though laws are v. cut some t

toxi toxins, air pollution is cutting human lives by about eight months on average and about two years in the hardest hurt regions. are you going to take a trip to europe now some eight months, that's okay? >> eight months? that's okay. i'm kind of -- i don't know. i'm going to stay here for a while. we just got that, you know that. you were in africa. >> i was there in may and my life got cut down a little bit. >> where were you in may? >> we went to paris. >> it's hard to keep track. it is. right? are you guilty the entire time with your lifestyle? >> no. proud 1%er. still to come this morning on squawk, president obama, mitt romney and their respective campaign staffers hitting the airwaves. we'll have some of the highlights. and in the next hour, we have two of the world's most renowned scholars in the field of energy. why they argue that the situation in iran could be a

game changer for crude prices. meantime, iranian hackers are have said to have attacked jpmorgan and citigroup. we'll talk cyber security. and ask reputation.com's michael fertik is the nation's banking system is at risk. ffrs . tomorrow on "squawk box," an hour with our guest host barry diller who ran pariramount and fox. we'll talk politics with jeb bush. at optionsxpress we create easy-to-use, powerful

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last night both mitt romney and president obama were on "60 minutes" and this was a chance to see both of the candidates. it was a very interesting way of watching about it, among the topics that were talked about, romney responding to his comments on that now infamous secret fund-raising tape. listen in. >> that's not the campaign. that was me, all right? that's not a campaign. >> you are the campaign. >> i've got a very effective campaign, it's doing a very good job but not everything i say is elegant and i want to make it very clear, i want to help 100% of the american people. >> and here's an exchange on jobs and the economy. >> 43 months above 8%, huge

profits on wall street. you've got the stock market that's doing incredibly well, and yet you still got this unemployment. >> oh, absolutely, well look, nobody's more concerned about the employment situation than i am. the problem we have was the hole was so deep when we got in, we lost 9 million jobs, we've created 4.5, we've still got a long way to go. i've put forward very specific plans that we know would create jobs and that's not my opinion. that's the opinion of independent economists. >> so those are the two candidates, and guys, i know you both watched both of these, too. to me what, struck me is that romney took the opportunity to lay out some details that we hadn't heard about before. he was very clear about what he would do on a few things when it comes to social security and medicare, he said he would make the means tested to make sure people of lower incomes get lower out of it, people of higher incomes get less out of

it, he talked about his tax plans while he didn't give down to every detail about what he would and wouldn't allow for deductions. while the tax rates will come down he would make sure there was a progressive rate that was there. >> it was by a mile the best interview he's ever done. >> all we ever hear about is how he's going to cut taxes for himself and all his friends, we hear to the dollar amount how much romney is going to keep, it's demagogued so much at this point you have this impression of what romney said. he never said anything of that. >> he said for wealthy individuals their taxes are not going to go down. >> he always said it will maintain -- >> this was in front of a wide audience. >> i literally watched this and thought it's the most human he's ever been, the most detail oriented he's ever been and i know he's done it before, the most interesting for me, sort of separating himself and the medicare plan from paul ryan and there's a lot of independents in the middle who watched that,

anxious, by the way, about paul ryan's plan, ahh, maybe he's going a different direction. >> basically nobody 55 or over has to worry about it. even when you change it, you either keep the medicare that you have or do it in a different -- >> he said paul ryan's plan would take the $716 billion and put it toward the deficit and i wouldn't. >> i don't think i've ever heard that before. >> yeah, he's said that. did you watch any of the debates during the campaigns? this is the same romney that was in every one of those debates, but -- >> you know what, the narrative changed about a month and a half ago when he chose paul ryan and i think seeing him now -- >> when you started worrying about whether he's an extremist. >> you talk about trying to capture the middle, that's what this is about and i think he did a pretty good job last night. >> "60 minutes" was celebrating 45 years of whatever, the first one they did was nixon and humphrey and celebrating 45

years. when i watched "60 minutes" i wish we had done the interview of both guys. >> i can't fault you in that thinking. >> i appreciated watching though. >> i have a bernie goldberg impression. 45 years, let me ask you this. would you go to either msnbc or fox and have both and think that you were getting a -- >> no, but i didn't feel -- >> they did a good job. >> "60 minutes" it's the same thing. >> here i am telling you how good a job i think romney did on this thing. >> steve kroft only attacks obama for not following up on what he said for liberals. >> he said the republican congress, it's your job as a leader. >> he asked why did you spend a year and a half on obama care fiddling while the economy crashed. >> we didn't talk about romney's taxes but that's separate issue. more stories including a major apple supplier halting eruption at its chinese factory

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"squawk box" keeping our eyes on the prize, its eight a "squawk" oil summit. the smartest minds in the industry. safeguarding your online reputation. the founder an ceo of reputation.com on what needs to happen to secure the financial world and america's threat against their cyber structure. plus media expert wychele wo michael wolf tells us about the future of social media as the second hour of "squawk box" begins right now. welcome back to "squawk box" on cnbc.

i'm becky quick along with joe kernen and andrew ross sorkin. take a look at the line-up, geopolitical concerns and a slowing economy impacting the oil markets. we'll find out where oil is headed with nbc global energy analyst dan yergen. from security breaches at corporations to protections yourself online, michael fertik will be joining us at 7:30, coming up at 8:00, tim pawlenty will talk to us first about his new job as head of the financial services round table and 8:15 eastern time the state of education in america, we'll help kick off the nbc education nation summit with walter isaacson and craig barrett. let's get over to andrew with a look at the top stories. >> thank you and good morning to you. futures we have red arrows pretty much across the board there. you can look at it, dow jones looks like it's off about 56 points, nasdaq off about 12 points and the s&p 500 off about

7 points, worth also noting the article in the "wall street journal" saying some hedge fund managers may be taking money out of the market and getting on the sidelines now they have the double-digit returns. let's talk about the biggest news this morning, headline this morning, 40 people were injured in a fight at a factory owned by apple supplier foxconn involving as many as 2,000 workers. it's not known if it's involved in iphone production. it appears for now not to be work related. home builder lennar reports profit of 45 cents per share, it says new orders during the quarter were up 44% from a year ago with home deliveries up 28%. this new survey for you, joe, finding 45% of economists believe that congress should reduce the federal deficit with a combination of spending cuts and tax hikes, the majority of those polled by the national

association for business economics say uncertainty about the fiscal cliff and how it might be addressed is slowing the economic recovery and we didn't even talk about homeland but they were the big winners last night. >> thank you. in the meantime gasoline prices dropping 0.4 of a cent the last few weeks. although the drop is minimal, it does stop a seven-week string of increases. the national average price of a gallon of regular gasoline now stands at just over $3.83, but with oil prices falling all the way down to $91 today, you might expect to see more drops at the pump coming in the near future. we'll talk more about oil in a few minutes. the dow is a little different. insurance giant united health will officially move into the group. kraft foods will leave the dow. the parent company will become

mondoles internations or internationals? that's what it has here, i'm reading the -- trade under the ticker under mdlz. >> very international, like it's from another country, a little foreign. >> i remember when united airlines turned to allegis. wasn't united a good name? isn't craft a good name? >> they're keeping kraft for part of this. >> mondolez i never heard of. woolworth came up with the nader. >> if you were a "squawk" tweeter, if you could rename -- >> mondolez. >>. >> international, let's rename the company, get some tweets because this is an awful name.

>> what are the products left? >> it's an abomination of a name. it's the grocery business. >> sandy weill and came up with the prime. >> how much money do you think was spent on branding company that came with whatever that is? >> a lot, and for a while i didn't think verizon was such a great name. >> verizon has grown on me. it's been around long enough. if you can survive long enough it will grow on you. >> except they're trying to force fios down my throat. >> fios is great. >> i have copper wires, they're trying to put fiber in my house, keep showing up. >> wait a second, you have comcast. >> and i wouldn't -- >> i don't have comcast anywhere near me. >> that's your excuse for consorting with the enemy. >> i'd rather pay for it than get it for free.

louisa boyeson is in london, good morning. >> hi, hello, good morning. i'm sure you might be able to borrow one of the danish names for a grocery store like boleson, eima, neitl, they're out there. markets are across the board, down by 0.7% on the stock 600. remember that on friday we saw just a little bit of moderating towards the very end of trade as we came back from those very close to 14-month highs so we're continuing lower this morning. i want to show you our main european markets. we're lower by somewhere in the region of 0.5% to 1.5%. the german data indicating business confidence in germany is on a downward trajectory. it seems despite we have the ecb bond buying program going in full the confidence isn't feeding back into core europe

which is where we really need to see it. little bit of a breath coming out of european markets in this morning's trade. let's show you our sectors. switching again construction material trading lower. auto is lower, the paris auto show taking place this week, that should be interesting. i was talking to somebody about what the big agenda items are going to be this year and we're looking at cars that are lightweight, those are the things that people want to know about, basic resources off a bit, health care a little bit higher but by and large a red screen we're seeing today. the german market very much in focus with the efo data and later on this week important to note that spain is going to be back on the agenda. when is it not going to be on the agenda these days. saturday we had comments from the economy minister in spain indicating they're not rushing forth to seek a bailout but it's been a back and forth on that notion for a time. on thursday they'll decide whether or not to adopt the

first draft of the 2013 budget, and then details about the spanish banking sector and the germans are saying that a stabilizing mechanism of the spanish banking sector, but that should do it, as spain doesn't need to go to the table and ask for a full bailout if they first take the first measures to get their banks to stabilize, that should be enough in the first round. guys, back to you. >> okay, thank you, louislouisa. >> i looked up mondolese. >> two employees. >> two came one it, supposed to evoke the idea of the globe and delicious and mondo in the romance languages is, mundo in spanish is the world, supposed to sound like delicious world but probably doesn't mean anything to anybody outside of italy, france, spain. >> shactman thinks they should

change it to vandolay industries. people know vandolay. that was an importer/exporter and -- >> these guys are doing both. >> do you remember what this guy supposedly did because they tried to pin him down in matches, either import, export and diapers and he was covering for elaine supposedly. he wanted to meet marisa tomei, it was one of those. >> they have good brands, velveeta, oscar mayer. >> oreos. they say it's mostly the brands that you know but at least they didn't pay an outside company to come up with it. >> vandolay is only slightly better. comments or questioning, shoot us on e-mail squawk@cnbc.com, follow us on twitte twitter @squawkcnbc, send us those names to replace mondolese

international. coming up, iran and its effect on the oil market. our oil summit is coming up next. still to come, reputation.com, protecting corporate america and personal bank accounts, the company's ceo will join us here on stock and learn how to maybe scrub google, after the break. comments? questions? send them to @squawkcnbc on twitter, follow the show and look for updates from andrew, becky, joe and the "squawk" staff. "squawk box" on cnbc and on twitter. bob...

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welcome back to "squawk" this monday morning. we have red arrows pretty much across the board there. dow jones looks like it's off 56 points, nasdaq would open 11 points off, s&p 500 would open off as well. >> we've also been keeping an eye on oil prices, they've continued to drop today. watching oil prices back down around $91 a barrel, it's been happening as qe3 has come on. joining us right now to talk more about it from washington is dan yergen, author of the book "the quest" and ihsa chairman. why have oil prices been coming down? what is your thought through this? >> i think the dominant reason is the fundamentals, weak europe, the bump with question three-the feeling it won't have

as much impact and weakness in the global economy. i just came back from china and they're preoccupied when their economy is going to turn around so i think it pushes all the iran stuff is still there but right now it's more the economics. >> what do you think a fair price for oil is if you were able to get qe3 entirely out of it? an analyst last week said it should be around six-year $60 o. >> at $60 or $70, we'd see some of the extremes of oil dry up. i think $90 to $100 is considered a price the world economy can take in stride, keeps development going, but doesn't put big pressure on the economy, these higher prices we've had have been one of the head winds for the economy. >> if you say some of the oil would dry up, where would they stop drilling if oil fell back to $75? >> we'd see the canadian oil sands, some of the offshore oil would be challenged by it, so

it's the higher priced oils that exist in the upper end of the spectrum. >> how important is that? i guess my question is, does that mean we'll never get back to $60, $75 oil because when you do, you lose that supply? how important is that supply? >> i think canadian oil sands, output is bigger than libya's output before the civil war there, so these are big numbers. >> so in your opinion we won't get back to those levels again? >> listen, we remember in the middle of 2008 we're 147.27, end of the year a little over $30 a barrel. if we had a big economic downturn we could see oil prices falling in the context of that but there is these balancing mechanism there is. >> what about qe3?

i was surprised to see prices come back down so quickly after that initial pop from qe3. are you in the camp of people who think all that money is not going to flow into oil? >> well i think that obviously one reason it was thought question three-would benefit oil because money would go into commodities, fear of inflation. the market's view is that the impact will be less and the weakness is really what dominates it. when we look at our numbers we see this buildup of oil continuing including for the united states, our production is up 25% since 2008. >> so we've seen prices at the pump come down slightly. you think we'll see a much bigger drop at the pump as the drop in crude oil prices trickles down? >> yes. our view on kind of fundamentals is that we would see oil prices continuing down in the fourth quarter, with one big if, and that big if is of course iran, just yesterday or today one of the iranian leaders threatened

preventative war against israel. this tension is still there, and i think we're going to be in this bubbling situation on iran until after the election, actually, our election. >> dan, i want to thank you very much for your time today. >> thank you. >> dan yergin. up next an emotional win for the baltimore ravens, highlights of that game and others around the envelope. international security breaches at two major banks have corporate america on highlight. the ceo of reputation.com talks about keeping businesses safe. and he's known for his reputation as a media and talent spotter, yahoo! board member and founder of activate, michael wolf will join us, then at the top of the hour, tim pawlenty, t. paw discusses his new gig as head of the financial services roundtable. 8:15 eastern, walter isaacson and former intel chairman craig barrett help kick off the education nation initiative. "squawk box" will be right back. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong.

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we're back on this monday morning. it was a wild weekend in sports. the baltimore ravens rallying around torrey smith who lost his

brother hours before the became in a motorcycle accident, beating the new england patriots 31-30 in a come-from-behind win, smith had 127 yards and two touchdowns in the emotional victory. the arizona cardinals are one of three teams remaining undefeated, they knocked off michael vick and the philadelphia eagles 27-6. in baseball the hunt for october in full swing after an amazing run with dramatic wins the new york yankees lost to the oakland athletics 5-4, the baltimore orioles fell to the red sox 2-1. the o's still trail the yankees by one game in the a.l. east. >> i don't know, the director reportedly doesn't influence this stuff but the most satisfying game yesterday was watching pittsburgh lose in the last, in the final seconds to carson palmer in oakland and watching that -- >> boo! >> i only saw the end of that game. >> watching that big lug of a quarterback -- >> he is good. >> god, is he good.

he's hard to root for. why are you in my ear? who cut my mike off?! he cut my mike off. >> he can hear us but not you. >> boy that was satisfying, i felt so good and it was a coach of oakland, his first win and to do it against the steelers that -- my mike is gone again. >> what's that? we can't hear you. we can't hear anything you say, joe. >> just very satisfying when that team -- stop it! let's go. we're talking politics and taxes this morning. it's bad he has the ability to do that. this is mitt romney talking about taxes on "60 minutes" last night. >> well, the current rates less 20%, so the top rate for instance would go from 35% to 28%, middle rates would come down by 20%, all the rates come down but less people think there's going to be a huge reduction in the taxes they owe. that's not the case because

we're going to limit reductions and exemptions for people at the high end. i want to keep the current progressivity in the code. there should be no high income tax deduction for high income people. i'd like to tax deduction for middle income families eliminating the tax for middle income families on limited interest and capital gains. >> that's the first time i've heard him float the idea of eliminating taxes, capital gains taxes for middle income people. >> apparently afterwards one of his advisers said for anybody under $200,000 or less would not pay capital gains. that changes things. that's interesting. >> the emmys were on at the same time. >> the emmys were on and so were the ravens and the patriots. maybe the ravens and the patriots came a little later. >> we'll see but all right.

>> what did you make of his tax returns? >> i actually was tweeting about it. i said it's nice that we're still talking about that with 24 million people unemployed and 50 million people on food stamps. axelrod is happy everybody's still talking about that. if you add the charity, the contribution of charity and the taxes it's had 42%. robert reisch wrote mitt romney is an example of everything that's wrong with this country and my point is if you have someone in a position to contribute $4 million to charity and pays $1.9 million in taxes, that i wish number one everybody did that. i wish the entire country was able to or at least ten times as many people, 100 times as many people like that, 1,000 times as many. immediately the liberals said he

paid -- >> more in taxes and they were mad about that. >> but it's interesting, because we've talked about it, he doesn't pay it -- >> he pays too much or -- >> he came out and said, actually, and i don't know, it was said -- >> you know what i know what he said and i saw that. blah, blah, i saw that. he said though to stay at 13% which he promised he'd do. he could have given less than $4 million to charity and if he gave none of the $4 million to charity his rate would have been 20%. here's the thing -- >> i'm not debating you. >> you've got a sitting senator, majority leader who said mitt romney, i know for a fact paid nothing for the past 12 years. >> it's despicable. >> where is ed schultz and rachel maddow, where are these people screaming about harry reid? there's not a peep out of any of them. >> i'm saying it's despicable with you. >> even howard dean said maybe he's lost a little credibility

on this, but i haven't seen anyone saying anything about harry reid. >> on the issue of paying more than he's supposed to. he's come out repeatedly saying he shouldn't. >> i don't have a problem with that. >> because of what he said you want to hold him -- >> i'm saying the whole thing is a pr thing, right? he's paying more so that we can have a headline. >> if he didn't do it, he would have paid under 13 and he said i will pay -- >> correct. >> he said i'll make sure i pay 13% and again he could have -- >> if he only gave $2 million to charity, he wouldn't have had but to give the $4 million and other people were writing in on twitter that for the latter day saints church you're obligated to tithe. you have to? so are christians. you don't get thrown in jail if you don't tithe. >> you said it would be ridiculous for him to pay more than he should and then he did. >> i agree. >> you guys are missing the most important part here which is

this is the hugest argument for reform of the tax code. >> oh, that's the real story. >> for the president to complain about it. >> that's the whole thing all along. no one is saying he did anything outside the law and here we are talking about it for months and months. it's not about the law. every employment report he's laughing we're still talking about the taxes. >> ultimately this is about reform broadly and what that means. >> i know that. it's been laughing, every first friday of the month they're laughing we're still talking about romney's taxes. up next, mike fertik, reputation.com's founder, specializing in protecting personal information online, he'll talk about the best way to defend against cyber attacks. ♪

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welcome back to "squawk box," everyone. in our headlines this morning, we may know more about yahoo!'s future strategy direction this week. all things "d" reports melissa mayer will be holding an all hands meeting tomorrow. goldman sachs is on the verge of cutting 100 partners

from its ranks according to london's "sunday times," which also says the investment bank is scaling back its plans for emerging markets. and a rare tie at the tom of the weekend movie box office "end of watch" and "house at the end of the street" took in $13 million in north american ticket sales. the new clint eastwood movie "trouble with the curve" was close behind at $12.7 million. hey there, last week's cyber attacks against bank of america and jpmorgan chase has the financial services industry on high alert. joining us on set, michael fertik, founder and ceo of reputation.com and you were just named "tech america's" entrepreneur of the year, past winners include reed hoffman and mark pincus. off camera i said are you going to get the new iphone? >> what i said off camera was no i'm not going to get it yet because i never get it right off

the shelf from apple. >> when does version two come out in. >> six months, whatever it is but kind of the scuttlebutt value the conventional wisdom apple releases products a little bit early. they're beautiful, the design is amazing but the software is not quite ready, something about the antenna requires a case, we all know the stories and they're famous for that. that may change under the new leadership but the advise dom is you don't buy v1, or of an electric vehicle. it's electric, what happens in it rains or a plane, anything mission critical. >> so mr. reputation.com. >> or v2 or v3 of a russian plane. or russian airline ticket, i don't know if i would buy that. >> i want to talk banks real quick and get to the valley. >> russian banks, just teasing. >> the websites all went down, i use chase for my cash or what

have you, couldn't get to the bank account. what is the bank supposed to do when these things happen? you come out publicly and tell the world that you've been hacked? is that a good thing? does that make people feel better about you, worse? >> one of the big problems, i'm involved in the world economic forum on cyber security and one of the big problems is the victims, the commercial victims, the enterprise victims of attack, threat, breach, don't admit it because it's an embarrassment and so forth and so on so it's hard to get very good information. the banks are being targeted by sophisticated enemies, so anonymous and offshoots and so forth are saying let's bring down a website and bring down the function of an app. the good news is in almost all of the cases the breach is not a breach of your data, of your money. it's just a dysfunction of the website for a short amount of time and also the good news is that the banks are pretty good at cyber security. >> wait a second you said the good news is most of the time it's not a breach of your data,

but if they're not telling us anything how do we know there's a breach of data? >> in the west and united states there's a good set they're going to have to disclose things to you and insurance and so forth for accounts but most of the time you can't get online to your account. that's the big problem. there's a denial services attack, something going wrong with the website but not with the guts of the engine, but here's what's interesting for you guys. the soft underbelly of cyber security in the commercial developed world is the lateral companies, the consulting companies, the law firms, the accountancies, because they're in every major deal, they're in all of the investigations, they're in all of the transactions and although they're good as secrecy, we' we're -- they're not very good at security. something that could easily be fixed in corporate america, corporate developed world would be stop using usb keys that they give you at conferences. you go to the world economic forum conference, in china, they

give you these usb keys. there's no way that anyone should ever -- imagine a more target rich part than the china conference. >> have you ever been hacked? >> no. >> how worried should viewers be about being hacked in terms of their bank accounts in. >> most people do not need to worry about the safety of their information, but most people should worry about their privacy, most of us are being hacked in what i would say kind of a more soft way every day, when we're on the web our privacy is being mined, our offshrine data, big part of the financial times yesterday and today about how facebook is mining data about you online, we know that and then marrying that data with offline information through datalogics and a big article in the financial times this may be this combination of data a huge violation of the recent settlement with the fdc. >> they can spot your picture online. >> and big news in the financial

times about that or yesterday. europe has taken a step to block facebook from using its facial recognition technology in europe which represents about a third of facebooks arevenue is europe. >> another silicon valley, does yahoo! have a chance to come back? >> yes, they have a chance to come back. we don't know what they're going to do. i'm hoping they're going to do more than just search and advertising. they seem to have free food, more advertising which is exciting, she's a smart person, and people are saying the hopes are up, people are excited to be there. i think it would be cool if yahoo! did not just do just do advertising sales and increased advertising revenue but also things like they've got a huge data set about people around the world, they could be the world's e-commerce bank, the hub of digital transactions around the world. that would be exciting stuff. my guess is they'll try to get

their house in order on the advertising and search side and hopefully build from there in an aggressive way. >> mike fertik will sticking around for another block and we have somebody coming up who knows a lot about yahoo!. >> knows a lot. >> we'll bring in consultant yahoo! board member and former mtv executive and, excuse me, activate founder michael wolf to discuss the future of media, the web and more. top of the hour we've got a big interview with former presidential candidate tim pawlenty. "squawk" is coming back right after this. good morning, michael.

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welcome back, everybody. check on the markets this morning, the dow futures down 44 points, off the worst levels of the morning, s&p and nasdaq futures are also down today. oil prices have been dropping rapidly, too, and that continues today, $1 lower at $91.86 for wti crude oil. the ten-year note has been sitting right around 1.7%, yielding 1.79% right now. dollar a little stronger against the euro, that is a relative term. talking about 1.2933, the impact since qe3 was announced and gold prices down $15.80 to $1762.20

an hour. an ounce. >> what will the future of social media look like? joining us on set is michael wolf, co-founder and managing director of activate.com, former president and coo of mtv networks and former director at mckinsye ckinsey, also on the b yahoo! and sticking with us, michael fertik, founder and ceo of reputation.com. >> the one who i said this on the air it happened outed mr. baldwin on the plane, that was him sits next to him. >> shows you what social media can do and how apocalyptic 140 characters can be in the day of a star. >> you would know about whether businesses are businesses or not and we were just talking about facebook and facebook has a lot of social i guess at this point, do we know it's a great business? >> well it's 900 million people are on facebook but it isn't

much of a business yet and the reason is because the only way they figured out how to make money is all the little ads that are up and down the sides of the page and suddenly when it goes to mobile, those ads, there isn't an easy place for those ads. interestingly enough it's fascinating, twitter, which has less than really 20% of the members of facebook has twice as much advertising on an iphone, or a samsung phone. and so facebook, i expect facebook is going to have a lot more trouble in terms of earning revenue and growing the business profitably. >> so when you said that it's really not much of a business yet, did the irony of $100 billion market cap, i mean, was that, were you aware of how ironic it is, the statement that there's really not much of a business yet when we had an ipo, that's a bad commentary on what everyone did. i mean whether it's, you know, of the hype -- >> market cap less than 50.

>> the media, the underwriters. >> got it right here. >> but everyone involved, we went through 1999. how did this happen? >> can you imagine how bad that is for the privately held companies in silicon valley, how badly they messed it up for the rest of this. >> this is not just rhyming, this is back toex site.com or something. >> huge gap that's between a successful business and a successful consumer application, and how much it's valued on wall street. and in this case, it was way overhyped, so many people thought of it, there were a lot of analysts who said $100 billion was too low. there were a lot of people that are bye rating on this stock. the reality is that people are using social media a great deal more. it's an integral part of people's lives. the challenge is facebook hasn't figured out how to make as much money as other people do. >> eventually they do or they don't? >> it's not google.

>> they have do do it fast. there's a pass pag raid in consumer internet, emerging as an important truth of social media, the disruption is accelerating. as soon as you have 100 million users somebody takes 80 million of the users, which is a problem for pinterest, instagram. >> some of them are fads? >> some are fads and some may prove to be lasting. >> who is the winner? >> zynga bought draw something! and within a few months the users were all gone, a purchase looked poorly upon by wall street because the users were not sticky. wall street figured out gaming users are not sticky but the same is emerging to be true about social media. that's the ultimate problem for facebook, unlike a yahoo! or google where people tend to stick around a long time. >> mike, would you agree with

that? >> i think what's happening there are a set of applications on mobile taking advantage of social networks and they're becoming businesses unto themselves but riding on the back of facebook. good example is air b&b and a lot of people can't imagine what this company does, it finds a way for people to rent somebody else's apartment or a room in their apartment when they're travel and one of the reasons why people trust air b&b is because you can look on your social network and you can somehow find a connection to the person that's renting that apartment. the problem is, facebook doesn't get any of that money, and from zynga, facebook doesn't really get that money either except for zynga advertises on facebook. >> it was reported air b&b was valued at over $1 billion in a private realm so the debate is over we're in a bubble. what is interesting, there is nuance. it's a distributed bubble. there are companies that have

real revenues that have real growth that are valued or overvalued and there are companies that have something about usage and some big potential and that's bubblicious and the return of enterprise, companies more khaki pants and blue collared shirts are coming back, killing it when they go public, huge sticky contracts, big chunky revenue that's predictable. >> it isn't the hot thing but -- >> now unfortunately it's already the hot thing, like three weeks, cold to super hot. >> you could almost argue that each of these social networks is like a big party and then the party moves on and that certainly is what happened with frie friendster. >> the party stopped? >> the party goes somewhere else. like a group of people, all of my friends are here and that's what's valuable.

>> when your mom is part of the party you move on. you go to the next. >> what does it say about yahoo! in. >> the web has got on it the point that there are a lot of companies getting a second trip around. ebay, a lot are counting ebay out and now ebay is back. i'm confident the same thing will happen with yahoo!. the company this board has hired the most successful person, one of the five people who's built one of the largest businesses in silicon valley and very exciting to see what can happen with this business. >> i've never left yahoo! always had a yahoo! e-mail account so i don't know what that says about it. >> you and 600 million, 00 million other people. >> you have a personal e-mail account. >> do you use your yahoo! e-mail account as your spam e-mail box or chief e-mail box? >> it's not my chief because i

can't put it on my blackberry for work. >> you're still carrying a blackberry? >> i am all things out of date. >> slightly off topic but becky was mentioning the front page of the "new york times" over the weekend, cloud computing, talking about the enterprise, the amount of energy that the servers and server farms are taking up and the inefficie of it all. >> good news on that. bad news is there's a lot of wastage. >> sounded like they were wasting 70% of the energy. >> like las vegas. >> 90%. >> las vegas in oregon, huge data centers sucking energy. the difficulty in clean tech there's an answer to that, there are good energy efficiency companies that are building technologies for this business. >> should we be worried? >> i don't think so. some of the companies found smarter ways to use energy. google, one of its data centers is being powered by water.

it's hydro, because they bought an old smelting plant and look, this is the next wave industry. you got to expect it's going to use power and no different than detroit uses power to make cars. >> the great irony of tech is -- >> also the point they're going to hit a wall at some point. you can't continue to suck up that much energy and have 90% waiting for the big search to come. >> watching the program there will be a dozen entrepreneurs. >> might be better to invest in that than a social needia site. >> sounds like that's where the money should go. >> do something. >> we should start a "squawk" fund. >> @squawkfund. i've got a blackberry and no personal e-mail account so i'm so out of this. >> you have a lot of inside information, too. >> hello. >> hello. okay. there are going to be more and more applications using the cloud and these data centers,

it's nowhere close, we're only seeing the beginning of the amount of information from mobile, from the web, from other places that are going to be stored in the cloud so there does have to be a more energy efficient solution. >> the cloud is now, this is the cloud around the cloud. the cloud just means all the software we used to download on our machines is out there. >> the industrial net it's called. >> leave is to ibm to have the best brand name. >> mckinsey should have come up with that. >> modolize internet. >> we can talk about or worry about what's happening in the valuations but the fact there are valuations like this inspire some kids in a garage to start thinking about the next internet application, or the next wave of saving energy, and so this kind of an economy is going to create opportunities for somebody to come along, that's where

innovation will come out of. >> gentlemen, thank you so both of you. really appreciate your time today. >> thank you. still to come this morning, he quit the campaign trail to head up the financial services roundtable. tim pawlenty will join us at the top of the hour. "squawk" will be right back. up next on "squawk box," don't start your day owithout knowing the names that make you money. joe has your list of stocks to watch, after the break. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today and get a free 13-month e ibd™ subscription when you call 1-888-280-0149 now. optionsxpress by charles schwab.

♪ we're all water. i like it because on the video, on the video, john is like back there going, i know this sucks, i know this sucks, but i'm married to her. she's my girlfriend. let's take a look, the scary thing is, you play anything enough you start to like it. i'm kind of -- ♪ >> i'm not there yet. >> what do you mean you're not there yet? she's really more of an artist. what did she put up, wrote something in pen on the ceiling,

it was like, "hope" or "love" or i don't know. but that was, she's better at that. lennar 12 cents above estimates, new orders jumped 44%, deliveries up 28% and also see some movement higher in things like d.r. horton, kb home, because the market has been tough on the beezer lately. questcor is the subject of a government investigation involving its promotional practices, it will cooperate with the investigation but shareholders are a little bit, looked like they're disturbed, down eight points. united health is down in the dow, which replaced kraft, which is now mondo -- i don't know. toyota is boosting its green line-up.

hopefully you like that color. i think it shows the dirt too much, green, announcing plans for 21 new hybrids over the next three years. i wouldn't buy a green car because it's bad luck. >> why? >> the color green i don't like it. >> bad luck for who? did you make that up? >> no, i didn't. supposedly it's not a good luck. >> fighting irish. >> well, for that, yeah. goldman sachs is planning to fire 100 partners, should we get some applause? the fat cats are out digging ditches where they deserve to be. "the sunday times" says that over the weekend. >> i think that was "the london times." >> all right, it was? okay, they need to add another line here. deutsche bank is making positive comments about footlocker's stock following a meeting with management raising its forecast and darden was downgraded to neutral from overweight, not chris, the company. negative traffic environment and

risks in changes of management. you remember chris darden? you don't have any clue, no idea. doesn't matter. when we come back, we have more from the campaign trail, to the head of the financial services roundtable, tim pawlenty will be joining us after this. and still to come this morning the state of education in america, we're going to help kick off nbc's education nation sum wit walter isaacson of thes aspen institute and former intel chairman craig barrett. this country was built by working people.

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a new lobbyist for the big banks. first interview with former minnesota governor tim pawlenty, taking over as head of the financial services roundtable. education nation. ♪ back to school to prove to dad that i'm not a fool ♪ >> two big thinkers on jaefr hauling the education system. walter isaacson, and craig barrett, former chairman and ceo of intel. political showdown, a campaign strategy session with kelly ann conway and jimmy williams. >> i think the country will have made up its mind by october 1st. >> i disagree, i think they're going to wait for the debates. >> the third hour of "squawk box" starts right now. ♪ i got it all worked out

♪ but then you poke around for better plans ♪ ♪ not an easy street, if you give your all tonight ♪ welcome back to "squawk box" here on cnbc, first in business worldwide. good morning again, everybody, i'm earthquake earthquake along with joe kernen and andrew ross sorkin. in this hour on "squawk box," tim pawlenty is taking over as the head of the financial roundtable, will be here in a few moments. and then we'll hear from walter isaacson, ceo of the aspen institute and author of "steve jobs" the best selling biography and also joined by craig barrett, former chairman and ceo of intel. we'll talk campaign and pr with campaign managers. foxconn suspending

production at a factory in china after a brawl by as many as 2,000 employees at a dormitory that injured 40 people. the cause of the fight is under investigation. the taiwanese owned company declined to say whether this particular factory is involved in iphone production. and gas prices are dropping 0.4 of a cent over the past two weeks according to the latest lundberg survey which covers 2,500 gas stations worldwide. the drop is minimal but it stopped the seven week string of increases. the average price of a gallon of regular stands at $3.83. the dow is a little different, insurance giant united health care group is officially moving on to the big 30, but kraft foods leaving the exclusive group, spinning off its north american grocery business, the parent company will now become mondolese international and trade in the nasdaq under mdlz. i don't think any of us like that name particularly.

>> i don't. >> not growing on me. u.s. equity futures at this hour, we have red arrows across the board there, dow jones off 50, nasdaq would open up about 11 points off, s&p 500 open up about seven points. look at european equities, off as well, and in markets in asia as we flip that board, you're going to see quick mix but for the most part slightly in the red at the moment. former in inminute governor tim pawlenty gave up his post as co-chair of the romney presidential campaign to take on a new role as ceo of the financial services roundtable, a major wall street lobbying grum, he'll start his new gig on november 1st. governor pawlenty joins us this morning to give us some insight on his decision and what's ahead for the financial services roundtable. governor, good to see you. >> good to be with you. good morning. >> i'm reading all the scuttlebutt, you see it, too, they say he has no financial experience, but that's good, because he's an outsider, he's got no washington experience

because he was a governor, but that's good, and they also point out that you were a conservative in a liberal state, so you know how to at least talk to the other side, and that's what the financial services industry is going to need regardless of who wins the election. >> well, joe, in terms of my own background in addition to being eight years as a governor, advocate and leader of an organization, i've also served in the legislature in minnesota, i was a legislator for ten years and majority leader for four of those so i understand the legislative process and all that that implies but i'm excited about the opportunity, the roundtable and its members of course represent such an important part of the financial system in our country, and we can't have jobs unless we have businesses and you can't have businesses unless they're financed and the ability to have an approach to a public policy approach to financing businesses is a critical issue for our country, if we're going to have economic success, so i'm excited to be leading this organization. >> governor, did romney need you

or if you thought he was, it was really important that the governor wins the presidency, would you not have waited 'til after the election or did they say thanks but we don't need your services anymore because it's not going so well? how do we read this? >> you shouldn't read anything into it in that regard. this is an opportunity that came up and had to be decided now. it's a non-part son or bipartisan organization so they expect their leader understandably to not be out on the point on partisan political campaigns and that's understandable. i still of course personally support governor romney. i just couldn't condition on as formal title or role as national co-chair of the campaign for the reasons i just described. >> governor, there's a piece out i'm sure you've seen it over the weekend, by "breaking views" which says back when you were governor or campaigning you said that the banks were "reckless" and you had said that you vowed to end the "bailouts, carveouts, handouts and special deals."

of course now it's going to be, you're going to have to argue the opposite side. >> you missed the best quote, "they've got to get their snouts out of the trough" i think was one of the things you said, right, go mpb? governor? >> during the campaign people make those statements and i certainly did and the good news is that happened in the sense the law as it currently exists has an orderly wind-down for large financial institutions, paid for an assessment by the industry itself so there isn't a taxpayer component to any future intervention or involvement in the orderly wind-down of large financial institutions so that prediction or that comment actually came true. >> how do you think, were you unhappen i had not getting the vp pick? at least someone from wisconsin got it, next door. >> yeah, well close enough. actually i'm not disappointed about something i didn't expect to get, so obviously i was honored to be considered. i was honored to be on the list

but i never expected to be the final pick for a variety of reasons so i can't be disappointed at something you didn't expect to get. >> what do you make of the last month, and i've pointed out that there's gaffes that the candidate makes, and then there's a way things are covered by the main stream media. it's been a rocky month. what do you make of it? >> well, i'm of course now out of the business of commenting on political campaigns as a pundit and in terms of the campaign just generically, it's the nature of campaigns that you're going to have in 24-hour news cycle where even one utterance gets taken off into a national debate for 24, 48 hours, but candidates, whoever they are, whether they be at the federal, state or local level, if you talk all day, every day, eventually you're going to say some things that are a little off, and the opponents are going to seize on that and make a lot of hay out of it and that's the nature of politics. the last few weeks coming out of

the conventions the race is going to settle in, the debates are the next big series of events but again my focus now is on the roundtable and focusing on these financial institutions, and how we can make sure that we advocate policies that are going to keep their vitality and the vitality of america's economy in a positive direction. >> the 47% comment, i've been, long before the governor said it, i was using it to illustrate that if you have one candidate that wants to make sure everybody keeps getting everything that they want from the government, and you keep painting him as someone that, you know, that is going to just basically cut taxes for the rich, it's easier to appeal to the 99% than it is to the 1%. do you think we still have a country of 47% want it to keep on coming, is it possible to elect someone who says it can't keep on coming? >> well my focus, joe, is going to be on what can we do to make sure that we have --

>> you're back to the financial services thing, huh? >> yeah. >> i got a question for him. >> that makes you less interesting to talk, to governor, but after the election you can come on whenever you want about the financial services industry. >> all right, i'll take you up on that. >> i'll throw one at you, governor, the lead story today in the "wall street journal" is about how those free checking accounts are no longer free as banks have had to look around for ways to try and raise money in a much tougher environment for raising money, raising revenue. they are talking about how those fees have gone up about 25% to a record level, and that consumers are required to keep an ever growing amount of money, up about 23% to $723 on average in a checking account to get that free checking account. how do you respond to the story that, again, is across the front page of the "wall street journal" today? >> well we know this, that price controls don't work and if government tries to come into spaces, whether it be in checking or debit cards and the rest and try to assert price

controls history shows and markets reject that approach and so the idea i think is to let markets work as you allow banks to offer their propositions, checking or something else to the marketplace, the market will adjust and the market, people will migrate to the place best suited for them and their banking needs and the idea government's going to come in and try to put price controls on the offerings and services of financial institutions is not the right direction. >> you have a big future, you kept it on message, governor. who are you replacing there? we've had guys on a lot. >> steve bartlett. >> that's right, he was there a long time, did a good job. >> i remember that. all right, great, thank you. thanks for coming on today. >> thank you. coming up, education nation, an nbc special event on fixing america's struggling schools. up next we'll speak with walter isaacson, head of the aspen institute and author of the best selling biography "steve jobs" and former intel chairman and ceo craig barrett. the ugly side of politics,

why both parties might want america to secretly go over the fiscal cliff.

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territory, dow looks like it would open 54 points lower, nasdaq off about 12 points and the s&p 500 would be off about seven points this morning. this week, nbc universal presenting education nation across its networks, this event brings together policymaker, thought leaders, educators and parents and the public in pursuit of providing every american with an opportunity to achieve the best education in the world. these discussions cover the challenges, potential solutions, and innovations spanning the education landscape and michelle caruso-cabrera joins us from the new york public library with two very special guests. michelle? >> for the huge education nation summit that's going on here all day today, andrew, thanks so much. joining me on set former chairman and ceo of intel craig barrett now in charge of the head of a group of charter schools in the united states, walter isaacson, head of the aspen institute, the whole world knows him as the biographer "steve jobs" but i also think of you as the biographer of "albert

einstein and "ben franklin." you spend a lot of time with great thinkers in the united states. we're talking about innovation in schools. is technology always the best way to innovate? is innovation in schools about more technology? is that it? is it that simple? >> technology is a great tool, but if you want the magic in the classroom, the magic is a good teacher. it's not a computer. innovation is really getting great teachers who know their content material, get kids enthused about the subject. if technology was the key, the u.s. has more technology in the classroom than any other country, we'd have the best education system. we obviously do not. therefore technology is the no the only answer. >> you're involved with charter schools. why did you pick that way to improve education? >> every study of education says that there are three fundamentals, great teachers, high expectations, some tension in the system, you can do that without interference in a charter school, you're

independent of the system and i think we have the results to show it. there are some good charter schools, great charter schools and some bad ones, the bad ones should be shut down. >> the bad ones fail, as opposed to public schools, they never go away. >> you need to have laws that take failing schools, whether public or charter schools, and just clean the slate. >> how much is the aspen institute think being school choice and charter schools? >> down in new orleans after the hurricane we had to reinvent the system and whether the people from teach for america, kip academy, came in there after the storm and we at thes aspend institute put together a working group of new schools, new thinking group, went down there and did a little bit of what mr. barrett just said, which is create a whole network of charter schools, more than 65% of the kids in new orleans are in charter schools and to answer your question, charters are allowed to innovate a lot more and parents can pick and choose. in broadmoore, new orleans, there are three different

schools, one stayed open until 7:00 p.m. so the others had to stay open later in order to get the students to go there. likewise they had a longer school year so you get more innovation like that and we at the aspen institute are looking for ways to push innovation. >> do grades improve and scores? >> in louisiana, john white is here, who was head of the recovery school district in louisiana superintendent can tell you there have been double-digit score gains in the past three years. >> what would steve jobs say about education in america today? >> you look at ben franklin because he created the classroom with the academy of education and youth in philadelphia, the first real school for tradesmen, artisans, middle class kids and he invented a system in which there were just desks lined up with 24 kids and a teacher up front lecturing. you know what? after 350 years, we're still there. >> same thing. >> so steve jobs when he was talking about it talked about how you can, what a lot of the

education reform called flipping the classroom, letting the instructions, the interactive, the lectures but also interactive ways of learning be done, you know, electronically and you come to the classroom to collaborate, to work together to solve problems. >> when i interviewed milton friedman he said this is one of the few areas in america where there had been almost no innovation. >> you and i are part of trade journalism and that has been totally disrupt the by the digital revolution. this guy created microchips, totally disrupted almost every industry in america except the america classroom. >> health care hasn't gotten there either. [ laughter ] >> maybe nbc will invite us to the health care summit. >> we see all kinds of debates, though, we see studies that come out that say charter schools don't necessarily work, school choice doesn't necessarily work. do you think the debate is over? >> i think the debate is over

from the standpoint that you need competition to create innovation to force change in the system. the world is moving in that direction. we haven't gotten all the way there, for example, our charter school system started in arizona, a couple years ago we had to sue the state because the state was going to demand we go no faster than the public schools. we could not teach ahead in the curriculum. >> would we be waiting 300 years maybe? >> you know, there are great charter schools, you're going to have some people talking about them, carpe diem started in arizona, there are great systems across the country, some achieving great results. again, you have to shut down the systems that are not. it's an area for innovation, an area to try to do things new, and if they work, fine. seize on it. but you know, we also ought to get the entire united states to the backpack system where you

basically put the money for the kids' education in the backpack, you give the backpack to the kid, and the kid goes wherever the parents want to get the best education. >> gentlemen, thank you so much. great conversation, one that really needs to be had. thank you so much. andrew and guys, back to you. >> very special thank you to michelle. >> michelle, we can't talk to you? all right. >> i love the steve jobs question and answer by the way. quick programming note, craig barrett will be joining us on set as our guest host next monday at 7:00 a.m. eastern time. >> she heard you intro her. >> she did but she's there with a studio audience and i believe they're continuing that conversation. coming up next, sec chair mary shapiro on safeguarding investors in the era of high frequency trading, an exclusive interview you can only see here. in the next half hour campaign strategy with kelleyanne conway and jimmy williams will join us. ♪

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welcome back to "squawk box," everyone. in our headlines this morning, gasoline prices dropping just slightly over the last two weeks. this comes after seven straight weeks of increases, but when we say slightly, we really mean it. it dropped by less than one penny. the lundberg survey says the national average for a gallon of regular unleaded is now at $3.83.

and sec chair mary shapiro talking about high frequency trading and what can be done to protect investors. >> because of this enormous increase in the use of technology in our markets, and entities seeking to get new technologies into the marketplace faster, and that's one of the issues we'll focus on october 2nd is what kind of controls can be put in place to assure that technology, there will always be mistakes, to assure those mistakes don't hurt innocent investors and bystandards in our markets. >> the sec probing whether high frequency firms can use prototypes to jump in, in front of other investors. when we come back, both political parties talking tough on the fiscal cliff but is there more political capital to be gained by letting america go over the edge? cnbc's eamon javers will join us next with more on that. then a political strategy session with kellyanne conway and jimmy williams.

"squawk" will be back in two minutes. are you suffering from market fatigue? do you feel confused and out of touch with today's markets? you may be suffering from a serious condition known as information deficit disorder. >> it may be related to an imbalance between natural nerve cells in the brain. >> there's a cure, tune in to "squawk box" for instant relief. "squawk box's" premiere interviews atack market fatigue at the source, flooding your knowledge receptors with the information your body needs. side effects of "squawk box" include mental clarity, upward career mobility, abnormal portfolio growth and sudden inability to change the channel. take three hours of "squawk box" and be ready for your morning. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that

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welcome back to "squawk box." in the headlines this morning, look at stocks on the move, questcor pharmaceutical is taking a hit, the government is investigating its promotional practices, on the heels of last week's news aetna is tightening reimbursement practices. questcor says it's fully cooperating with the investigation. cooper tire is moving hire.

deutsche bank upgrading the stock from a buy to a hold. uncertainty over the expiration of tariffs on tires reported from china have created a buying opportunity. it says it's optimistic about cooper's prospects after talking with manufacturers, dealers and wholesalers. let's talk about the fiscal cliff, the political strategy behind it all, cnbc's eamon javers takes a look at the incentives behind avoiding or allowing that fiscal collapse, and eamon joins us now. >> good morning, andrew. you're right, both parties have sort of not so secret reasons why they might actually want to go over the fiscal cliff. let me lay out both scenarios for you.. i've been talking to wise men in washington over the past week ago and some folks are coming to the conclusion this is more like the t.a.r.p. vote, you need to see pain and turmoil before politicians make a decision here. that's not the majority view but that is what some people are increasingly saying. start with the more complicated

scenario here, why democrats might want to go over the fiscal cliff. first of all they don't want to extend the bush tax cuts for the top income bracket. in some scenario where they offer a deal, president obama offers a deal to republicans in which he says i'll give you everything you want except the top two brackets, if the republicans reject that it gives the democrats the opportunity to blame republicans for the market turmoil and saying the republicans are doing this because they favor the rich. the bad headlines force the republicans to the negotiating table and then under this scenario if you can follow the triple gainer political logic, democrats would offer a deal to republicans in which they say we'll offer you the biggest tax cut in american history, retroactively wipe out all the fiscal cliff tax increases except for the top two brackets, take it or leave it. republicans in that scenario might be forced to take it.

it gets them around the grover norquist problem. the republican scenario, if mitt romney wins the election he's already signaled he might not want anybody to do anything until january 20th, that's inauguration day, when he's sworn in. republicans might need to wait until then, after the fiscal cliff deadlines in order to have a president in the oval office who would sign a deal that they would like. guys if you look at both parties, they both have kind of reasons why they might want to negotiating or for timing reasons go over the fiscal cliff before pulling back, becoming an increasingly likely scenario in washington. >> i can tell you why, i've even said it, if you let all the bush tax cuts expire the deficit is easier to handle and a lot of the cuts we'll never get them done unless it's sequestration. >> conservatives want that. >> there would be some pain but a lot of people say we haven't had any pain. >> there are a lot of fiscal

purists who say we need this tough medicine. >> the hard thing to understand about the democrats, that's been the democrats' playbook for the last year. it's not hard to understand at all, the president for the last year, everything he's introduced was contingent upon taxing the two higher ends and he knew it wouldn't happen with the congress he had, immediately cast the republicans as obstructionists and able to go on "60 minutes" saying they haven't done anything i wanted. that's been the playbook for the last year, that thing you just gave, has been the playbook right out of the axelrod white house. >> here is the nuance this time around if you let the sequestration happen and you let the tax increases occur, then after that's already happened, obama can come to a republican congress in january, early january and say i'm now going to propose a tax decrease, will you vote for that? republicans might be in a box where they say you know what? i'll vote for a tax decrease that doesn't get me the bush tax

cuts for the top brackets because it's a vote for the decrease. the grover norquist problem they pledged not to vote for a tax increase by letting it happen and going back and retroactively coming all the way down, they can be in a position for voting for a tax decrease. it's nuance and semantics but it matters. >> they think the market would allow that time to wait until january or do you wind up with another t.a.r.p.-like situation? >> under these scenarios you get closer to another t.a.r.p.-like situation where it takes some action in the markets, some kind of turmoil in the markets for the dealmakers to really come to the table and be incentivized to come to a deal. increasingly in washington the politicians are not able to be proactive, they are reactive and respond to headlines and respond to pressure and a lot of these folks don't necessarily believe there will be a market inpact and they believe they can tell wall street we'll do all of this retroactively, trust us, give us a couple weeks, we'll make it work and get away with that and the question is whether wall

street will believe those assurances when we get to early january time frame. that's what it all hinges on. >> if you're a hard core deficit hawk the idea you do a compromise where all you do is let the top end expire and then you get rid of a lot of the, cut back on the spending cuts, on both sides, if all you do is get the enhanced revenue from the top and not getting where the bulk of the revenue would be if all the bush tax cuts expired and not getting the cuts you want, that's a much more ineffective -- fixing the fiscal cliff to a fiscal conservative is worse than letting it happen. >> right, republicans definitely want the spending cuts but a lot of the republicans are particularly hung up on the defense spending cuts. they don't want to see -- >> someday we have to broaden the base to more than people over 250. there's not enough money. you can go to 100% on people over and there's not enough money to do what needs to be done but no one's telling, you can't tell the american people that at this point. you're never going to raise taxes on the middle class again

ever. >> the lesson is we kicked the can down the road last year during the debt ceiling debacle. there's a proposal to kick the can down the road but make the poison pill even more poisony than it is now. i don't believe that scenario. they made this poison pill very poisony. >> at some point you have to swallow bitter medicine, you're right. >> the sequestration thing is awful, terrible, bad policy, everybody in washington hates it. they put it in place so it would force them to do a deal and now there's talk in washington about not doing a deal and coming up with another can kicker, but they say we'll make the poison pill in that one really bad. it's getting to be a farcical level of poison pill and no one believes it's real if you continue to kick the can down the road. >> eamon thank you for that. joe and becky, you saw cross the screen earlier on apple surpassing 5 million phones in

the last three days, tim cook out with a statement on what's going on, i should say that 5 million number includes the 2 million preorders. >> 2.5. >> yet it's worth noting they have 22 countries that come online just on this coming friday, i believe, about 100 million people also upgraded their ios and their iphones and ipads and whatnot and apparently it says demand for iphone 5 exceeded the initial supply and while a majority of orders are shipped to customers -- >> the stock is down 2.4%. >> you think we're expecting a higher snub. >> i don't know, that's not a good reaction. >> tim cook said "while we have sold out of our initial supply," and this might be part of it "stores continue to receive iphone 5 shipments regularly and customers can continue to order online and receive estimated delivery dates. we appreciate everyone's patience and are working hard to build enough iphones for everybody." >> the foxconn news over the

weekend. >> a lot of talk is this the top, can it keep, there's a lot of the articles written. >> the story today, the question you always like to ask, did you see this? will apple be the first to break $1 trillion? and well, maybe not. >> that would be a lot more, another 40%, right? >> it's got to keep going. and then of course the fight between apple and google continues over this maps service. i have not, by the way, upgraded my iphone or ipad because i don't want to lose google maps. >> why would you ever get a v1? >> what about a v8? i heard that. you never get the first version. you wait. how long did you wait? >> i wait so long -- >> you have to wait for the next v1. let's check on the markets. rick santelli joins us from the cme in chicago and steve liesman joins us on set with a report on the inflation effects of the new round of quantitative easing. what did you do, do you play with the dead yet or did you

fish? >> i went fishing last couple days. i've going to be playing with bob weir soon and the benefit, can we announced that now? october 19th doing a benefit for the wounded warrior project out in san francisco, we're going to play at bob weir's sweetwater club. isn't it cool? >> great. >> and sammy haga will show up because he lives down the road, and some other folks. >> sammy hagar ever play with bob weir? >> they do "loose lucy" together and a bunch of other songs. everything is sort of a meeting of minds, i just got the two-minute warning here in my head. >> oh, my god. >> do i have a time-out? >> rick, do you have anything? >> i want to do something quick on inflation, bring up the charts fast. lot of mixed signals whether or not the market is seeing inflation from the new round of quantitative easing. here are the numbers there, guys, oil, since the jackson hole meeting i picked two points, you can argue with the points, event studies are always flawed for this reason. i took the day before bernanke's jackson hole speech and the day

before the fed announcement which was on the 12th, there's gold up, commodities up, guys go quickly to the next screen and we'll show you the moves here, i wanted to give you a quick look at the levels, there are the moves, oil is down, gold is up, commodities are about flat, stocks are up, t.i.p.s. should be 0.18 and 0.14 basis points. those are the ones economists are watching. here is a comment from jim o'sullivan as high frequency economics. the big question is bernanke going to tolerate more inflation. he says our reeding of the chairman is that he is strongly committed keeping long-term inflation expectations contained and a significant rise, say 3.5% or higher would prompt him to backpedal. there is some research saying the fed does not have to tolerate much higher inflation in order to get higher -- sorry, lower unemployment. this is an issue we'll watch the indicators. it's only a couple weeks since the fed acted and we're going to

monitor this stuff to see whether or not there is building inflation pressures because of the open-ended commitment from the federal reserve. >> we had the two internet guys on earlier, really smart talking about we know we're in bubble land, it's bubblicious. i decided asset values, not just commodities, i decided the entire social media bubble is also being fueled by qe3 and easy money. >> okay. >> that asset -- >> okay. >> this guy came on and said that facebook really doesn't have much of a business and they need -- >> so it would be even lower than it is now. looking at facebook -- i saw barron's. i was always at $17 just for the record. >> $17 was your number? >> that was my number. >> people cash out with the valuation of $100 billion. >> it's absurd. >> where did that come from? money goes somewhere when it's being created. >> and destroyed from somewhere. >> okay, rick, what do you make of that? there's no inflation, qe3 has

actually just been -- >> i didn't say there's no inflation. >> -- not at all positive. >> becky, is that what i said for the record? >> not exactly. >> not exactly. >> i wanted to ask him also -- >> the stock market is up, everything else is down. >> i'm sure you heard the report, rick. you can react to the report as you heard it. >> no, no, listen, it's like talking, going back in time and talking to merlin about spinning straw into gold. whatever the central bank's press releases say, i don't buy into it. i don't think they have any way to look into a crystal ball. they have no way to know how velocity in a growing economy, if we ever get one again, is going to affect their balance sheet, but what i can tell you is, they can write all the research papers they want. they really don't know. >> hey, rick, i wanted to talk to you today, too, we've been talking about you since 6:00 this morning, just in terms of some of the other programs that have been coming out, this idea, kelly evans came up with this new program they're trying to pump up the housing market in london i believe, where you can

borrow from your parents' retirement to pay for your housing and all of the stuff gets us back to the issue we keep talking about, where at some point you have to take the pain for what's been out there, at some point you've got to swallow that bitter pill. that's been your point all along. >> it has, and i think the sad part of this, becky, is how many years are we now passed the e epicenter of pain and it's really simple, oversimplify. if you give anybody in life a chance to avoid something painful that they don't want to do, they will always take it. and many of these government programs have that exact effect. there was a couple of points where we saw housing activity percolate up a bit in an unexpected fashion. that was because there was a bit of a jump in rates. i think that goes a long way to explain the problem, if you're always going to babysit and keep your kid from ever touching a stove because he burned himself once you're going to end up with

a strange offspring and that's the offspring economy we're ending up with. >> thank you for that. coming up we're going to have a debate president obama and mitt romney trading shots on "60 minutes" last night innen early preview of what it might look like, coming up next a campaign debate strategy session with experts from both parties, kellyanne conway and jimmy williams will face off when "squawk" comes back. tegies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

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president obama and governor romney dominating "60 minutes" last night. >> if you ask me what's my biggest disappointment is that we haven't changed the tone in washington as much as i would have liked. >> you don't bear any responsibility for that? >> oh, i think that, you know, as president, i bear responsibility for everything to some degree. >> have i found some things i thought would be effective turned out not to be effective? absolutely. if you don't learn from experience, you don't learn from your mistakes. you ought to be fired. joining us with more on the countdown to the election is democratic strategist jimmy williams and kellyanne conway president of the polling company, the name of the polling company served as senior adviser to the president gingrich campaign as well. i take it you both watched last night? >> yes. >> jimmy, give us your takedown on what you thought? >> i'm glad the president, who i voted for, acknowledged that his biggest disappointment is he thought he could change washington. i caught so much hell from the left and the liberals especially

on twitter and on facebook when i tweeted back a couple months ago i thought his biggest downfall was that he walked into washington, d.c., and thought he could just change it all like a harry potter wand moment or something like that then they lit me up like fire. he acknowledged that's a problem. a, he's never had to deal with so many filibusters in the history of the country and b, he was a little naive. they talked about foreign policy and what their taxes were goal going to look like. frankly i walked away from both of the interviews and knewing in new i knew before the interviews. >> i felt like i learned a couple of things from governor romney. kelly a kellyanne? >> i did. he was specific about his tax vision because he was asked specific questions. jimmy, love you pal but most people don't look at the respected tax policies of obama and romney and say blah, blah,

blah. they say blah, blah, blah when he says change the tone in washington. he said two different things in the span of three days that univision he thinks the greatest, biggest disappoint, not biggest failure, the biggest disappointment is the lack of immigration policy. he goes to what he thinks is a different audience, and last night said he was unable to change the tone in washington. it's not about pointing the finger outward at congress or we the voters. it's about the captain of the ship taking responsibility for the fact that it's listing and people are still drowning. unemployment rate, the failed stimulus, you know the numbers. the federal deficit is $16 trillion and counting. why is there no responsibility? why doesn't he say it was more difficult than i thought it was going to be it will take more than four years but for a grown man to never say i'm sorry or i take responsibility is really remarkable. i thought last night romney looked like the ceo, he looked like the captain >> jimmy, one thing, i did hear

details from romney i hadn't heard in the past in terms of laying out how he would mean tests social security and medicare and how would you lower the taxes, but he said plainly, if you think you're going to pay less in taxes you're probably not going to particularly, if you were at the higher end of the income scale, that he's going to get rid of the deductions that higher income people would be taking. the other thing new the idea of giving middle class workers deductions for capital gains like 0% capital gains taxes. >> listen, now i have something i agree with governor romney on, he should means test social security, there's no reason when they pay social security should be done in february, frankly. and so i agree with him on that, but look, there's nothing that he said actually that you don't find on his website. his 59-point plan especially with regard to his tax stuff. here's my problem with that. he lacks credibility. he lacks a huge amount of credibility and the reason he does is because ultimately, what

he pays in taxes, and i disagree with kellyanne. when someone sees the reports that came out on friday and see he pays 14.1% but everybody in the country that actually works and earns a paycheck every two weeks they pay 15.3, their 15.3. they pay half, their employer pays half every single week. >> it's the way the tax code -- >> guys, i did tax policy for 7 1/2 years. i understand that. you're missing my point. >> then change that. >> that's the point. >> obama wants to change the tone. he doesn't want to change the taxes. >> but you're missing my point here, which is, when you look at your paycheck if you're an average consumer, you don't care. no one cares about that. >> then let's see where capital gains would be. >> capital gains would be affecting someone making $50,000 a year, joe. >> i don't know why we're talking about someone -- no one is saying he violated the law.

>> i'm not saying he violated the law. >> let's talk about that, whether it hurts or helps capital formation, let's talk about it. >> okay. what was capital gains under clinton? >> because then maybe we want to go back to that. people have said maybe we go back to something higher. that's a discussion we should have. why talk about someone who gives $4 million in charity and pays $2 million. everything that is wrong with this country. what if you had 100 times more people giving $4 million in charity? >> you can't go out and say that these people are entitled to, et cetera, et cetera, et cetera and expect them to look at you and say, wait main, he's paying less than i'm paying. >> he's paying even less than the law is requiring. >> i disagree. i think he bathes like crazy. >> you better hope so because we have two more unemployment

reports. better keep it on the tax issue and not on unemployment. coming up, what has jim cramer fired up as we head into the last quarter. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today and get a free 13-month e ibd™ subscription when you call 1-888-280-0149 now. optionsxpress by charles schwab.

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let's get down to the new york stock exchange. jim, there's a lot of stuff to talk about. kraft is going out, romney, taxes, your choice? >> i think that obama with apple could they sell five million and not be disappointing. only with apple could you read that everybody didn't have enough iphones and yet we decided that the iphone is not popular. this is kind of the culture of stock run up, stock come back apple that has been with us ever since it started the move and people abandon apple every time there is a negative headline. >> there is an article today in the "new york times" with apple, will they be the first to break 1 million? >> i think the quarter is going to be better than expected. people aren't focused on that

right now. they are focused on the line. i don't want a club that wants me. in the end, apple can stall out and still do well. that's always been something that people can't figure out. how could a stock stall out and go down and still be good? and that's apple. >> jim, we've got to run but what would be the turning point if there was one? people are starting to talk this way. >> what would make it feel like that this is no good anymore would be a sudden surge in samsung phones because the map factor is not good enough for apple. >> okay. jim, thanks so much. we'll see you in just a few moments. >> announcer: tomorrow on "squawk box," an hour with our guest host, barry diller. your money, your vote. we'll talk politics with former governor jeb bush. you can't afford to miss "squawk

box" starting tomorrow at 6:00 a.m. eastern. so -- tell me again what happened. i was downstairs making coffee, and we heard it. it just came crashing through the roof, out of nowhere. what is it? it's our ira. any idea what coulda caused this? maybe. i just sorta threw a little money here, a little money there. and i loaded up on something my dentist told me was hot. yeah. ♪

stock of the day is apple topping more than five